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HMRC internal manual

Collection of Student Loans Manual

From
HM Revenue & Customs
Updated
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SL repayments: borrower within PAYE: when to use the student loans deduction tables

Whilst employers within RTI must use payroll software, HMRC do provide a set of manual student loan deduction tables (SL3). There are however very few situations in which these tables would be needed and they should only be used if payroll software is cannot do the calculation for you.

The Tables handle the majority of cases, where the borrower is paid either weekly or monthly, but they can’t be used if the employees annual pay is more than the upper earnings limits.

Detailed guidance is given in the Student Loan Deduction Tables where the

  • Borrower’s level of earnings are in excess of the highest amounts shown in the tables

Or

  • Pay periods are other than weekly or monthly

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Computing student loan deductions where earnings for a week or month exceed the highest amount of earnings shown in the manual Student Loan deduction tables (SL3)

Instructions on what action to take in these circumstances are given in the Student Loan Deduction tables.

The following action should be taken by the employer

1. Deduct the pay period threshold from total earnings for the week or month
   
  * Deduct the weekly threshold from earnings in the week from weekly paid borrowers
  * Deduct the monthly threshold from earnings in the month for monthly paid borrowers
2. Multiply the result of Step 1, (the excess) by the rate in force
3. If the result at Step 2 includes an amount of pence, round down to the nearest pound
4. Record the amount of the Student Loan deductions

The examples below assume that the annual threshold is £17,495 and the rate is 9 per cent.

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Example - Weekly paid borrower

Earnings in week £1,200

Step 1 - Determine excess  
   
Earnings in the week £1,200.00
Deduct pay threshold figure £336
Result £864
Step 2 - Multiply excess £864 by 9 per cent = £77.76  
Step 3 - Round down result of step 2 = £77 = Student Loan deduction  

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Example - Monthly paid borrower

Earnings in month £6,055

Step 1 – Determine excess  
   
Earnings in the month £6,055.00
Deduct pay threshold figure £1,457
Result £4,598
Step 2 - Multiply excess £4,598 by 9 per cent = £413.82  
Step 3 - Round down result of step 2 = £413 = Student Loan deduction  

Note: See CSLM18000 onwards for more information on rounding down when a Priority Order applies.